The New Zealand CPI at 100: History and Interpretation.

I want to begin by paying a tribute to Jack Baker who was Government Statistician between 1958 and 1969. I first met him as a lecturer in economics statistics as a part of my second year economics course – yes the Government Statistician gave the lectures in those days. That is where I first met the Consumer Price Index. In those days a trainee economist was expected to know the details of the CPI – its conceptual underpinnings, how it was constructed, how it was used.

Today that it is not seen to be so necessary. One goes to the Statistics New Zealand website, then into ‘Infoshare’, ‘Economic Indicators’ and thence to ‘Consumer Price Index’. All very easy – especially if you can use a spreadsheet – so easy that even a journalist can do it. Indeed from some of its misuses as a general deflator, many economists have has much grasp of the index as the journalists who use it.

What they are all relying on is the integrity of Statistics New Zealand to produce high quality statistics, something which Jack emphasised, as have all of his successors. In my judgement the Department has maintained the high standards we expect of it; where I grumble is that there has been a lack of funding which has held up development of key statistics.

This led to a disjunction between the Department professionals and a handful the knowledgeable outsiders and the vast numbers who use or rely on the CPI. This book, The New Zealand CPI at100: History and Interpretation, helps fill in some of the gaps, indicating to lay economists, journalists and the general public just how complicated some aspects of the Index are.

It does not cover them all. You will have to hunt around for the relevant papers on the Statistics New Zealand website for that; deeper below that you may have to approach an expert.

One limitation of the website – but not of the book – is that material before the website was introduced is largely omitted. Understandably, because there are no electronic versions of the hard copy. But as the book shows, the CPI and its uses has a history which shapes today’s CPI. As in so many other areas, we forget economic history at our peril.

I acknowledge that Statistics New Zealand is slowly putting long term series on its website. That it is not a funding priority of the government is indicative of the short-termism which dominates so much of New Zealand’s economic thinking. The CPI is there, on Infoshare back to 1914; and predecessor series before 1914 are in the obscure part of the SNZ website too. (You can also use the Reserve Bank’s ‘Inflation Calculator’.)

It is a nice judgement whether the CPI is the most important official statistic. It has been with us longer that the National Accounts; volume GDP would be a challenger today. But, then again, censuses started in 1851.

Whatever, we need more published work of this technical and historical nature. I hope this study is a precursor, but that we don’t have to wait until 2039 for an authoritative review of the National Accounts, nor until 2051 for the bicentenary publication on the Population Census.

Goethe said that `it has been said that figures rule the world. Maybe. I am quite sure that it is figures which show us whether it is being ruled well or badly.’ A democracy requires, and a good government deserves, high quality statistics including adequate documentation and good histories. Jack would agree.